Empire Home Infusion Case Study

Empire Home Infusion Services

Since Empire Home Infusion Services switched to Mediware Reimbursement Services (MRS) in 2004, they have improved their cash flow, lowered their bad debt, and improved their DSO.

13% percentage improvement of Empire’s cash-to-net-revenue

60 days by which Empire reduced its days sales outstanding (DSO)

2.27% bad debt percentage with the help of MRS

The Malta, N.Y.-based nonprofit’s business had expanded 20 percent annually for eight years. Despite the booming business, the bottom line suffered as staff members struggled to get a handle on the company’s billing and collections. As a result, Empire’s days sales outstanding (DSO) spiraled to 116 — significantly higher than the industry average — and its bad debt peaked at 4.3%. Empire was leaking significant profit. In 2004, the company’s board insisted that Empire’s management team fix the issue and get on track. “We realized that we needed to take a new approach, which meant letting go of some financial control. It was a very difficult decision for us to make,” recalled Diana Boschi, R.Ph., who is the vice president and director of Empire Home Infusion.

Outsourcing with Confidence

New Direction

Letting go is hard to do when you’ve guided a small business from start-up to major player, as the executives at Empire had done. “We needed to improve our financial indicators, and we realized that, instead of using direct staff , we needed to consider outsourcing our billing services to best manage this process,” Boschi reported.

Empire got its start in 1985 as Home Town Apothecary, a for-profit small business that provided customized home infusion pharmacy services to a small population of patients in six counties surrounding Glens Falls, N.Y. Back then, Home Town Apothecary was a small company that typically employed less than 10 staff members. Usually, the staff included three pharmacists, two pharmacy technicians, a driver, a receptionist and an office manager who also handled the billing.

In 1996, Home Town Apothecary joined The Eddy and Northeast Health, a nonprofit network of hospitals together with rehabilitation, skilled nursing facilities and home care services. It was then that the company changed its name to Empire Home Infusion Services. Integrating with this large healthcare network meant that Empire’s access to referrals and contracts increased considerably. Soon, Empire expanded its realm to 16 counties.

By 2004, 180 patients relied on Empire for such intravenous products as antibiotics, nutritional therapy, pain management and chemotherapy to help them manage their illnesses in the comfort of their homes. During Empire’s eight-year growth spurt, the task of billing and collections proved to be a constant stumbling block for the staff , which was now comprised 25 employees in administrative and clinical functions. “Looking back, it was a culmination of issues that developed into a problem for us: our growth, inexperienced staff , inadequate resources and the complexity of the industry,” said Boschi. “We were just spread too thin,” she added.

Lost in Transactions

In the home infusion business, reimbursements from Medicare, Medicaid and third-party payers require careful attention to detail and staying abreast of government regulations. One error in coding or an incomplete authorization form can bottleneck paperwork, derail the reimbursement process and result in nonpayment. With just a handful of staff members dedicated to minding the company’s accounts receivable and payable, Empire’s management team quickly realized how turnover — even routine employee absences — could snowball into a crisis. “For a company our size, losing one or two people had a huge impact,” said Boschi. “We spent a lot of time training individuals, but infusion pharmacy billing is very difficult for people to grasp because of the complex coding, drugs, authorizations and regulations involved. Not many people specialize in this type of billing.”

Results that Speak for Themselves

In 2004, Empire outsourced its billing and collections to Mediware Reimbursement Services, a leader in billing and collections for the home infusion and respiratory therapy/durable medical equipment (RT/DME) industries. While outsourcing meant eliminating four positions, Empire gained a dedicated team of billing experts — a team specializing in infusion pharmacy and specifi c payers such as Medicare, Medicaid and all commercial providers. With a 50-person staff led by four managers with deep roots in the infusion pharmacy industry, Mediware Reimbursement Services’ team helps clients like Empire maximize profi ts. Monthly audits ensure that only “clean claims” — those that are accurate, complete and comply with payers’ restrictions — get sent out.

Mediware Reimbursement Services staff members also log detailed claim notes to track activity until claims are resolved in their entirety. Those detailed progress notes meant that anyone at Mediware or Empire could easily check the status of a particular account. It also meant that claims met payers’ deadlines.

Mediware Reimbursement Services also used sophisticated reimbursement and productivity tools to measure Empire’s billing and collection performance. And they helped Empire negotiate pricing before services were rendered, which led to 10% to 20% more revenue captured. Mediware Reimbursement Services assigned two account managers to work closely with the Empire management team. With two people on point to answer questions at any time, Boschi and her team were willing to step back and let Mediware Reimbursement Services take over its billing and collections processes.